Duke-backed North Carolina bill would cut 61% emissions by 2030, phase out coal sooner
North Carolina Republicans on Tuesday unveiled the overall energy bill Duke Energy had promised to its shareholders.
The legislation would reduce carbon emissions by 61% from 2005 levels by 2030, just below Democratic Governor Roy Cooper’s 70% target by that date, and keep some coal-fired power plants in operation at that time. beyond 2027., while removing the others sooner and replacing them with natural gas or renewables. It also calls for 55% of renewable energy production to be owned by Duke and 45% to independent power producers, and establishes a multi-year tariff plan – something the utility has long been calling for.
Democrats say a full energy update is needed, but amendments will need to be made to this bill for it to pass. They and other state stakeholders, including taxpayer advocates and environmentalists, were left out of the closed-door negotiations that resulted in the legislation.
“His hard to see any fixes that might make it acceptable, ”said Gudrun Thompson, senior counsel at the Southern Environmental Law Center. She was part of a coalition that worked with Duke last fall on exploring broader opportunities for energy reform in the state, and was subsequently excluded from negotiations over the legislation.
“A bad process is likely to result in a bad invoice,” she said.
Months of negotiations between Duke, the renewable energy industry, industrial consumer advocates and Republicans resulted in a 48-page bill, House Bill 951, introduced in the State House of Representatives this week, which would represent the biggest change to North Carolina’s clean energy policy since 2017.
It’s a response, in part, to Governor Cooper’s executive order and his administration’s successive clean energy plan that would cut the state’s emissions by 70% below 2005 emissions over the next decade. The bill would require the utility to withdraw its 2,090 MW Marshall coal-fired power plant by 2026, eight years ahead of schedule and replace it with natural gas, and slightly accelerate the plant’s decommissioning. Allen’s coal-fired plant – from 2024 to 2023 – and to replace this plant with renewable energies and storage.
“We constantly hear from our customers that they want their energy to come from cleaner sources and that they want Duke Energy to make those investments while keeping energy prices affordable,” said the Duke spokesperson. , Grace Rountree, in an email. “With that in mind, we support our state leaders in charting a path forward for an orderly energy transition – a path that supports communities and helps ensure the continued affordability and reliability our customers depend on. “
Duke’s plant in Roxboro could retire in 2027, but according to the proposed wording, this retirement would be contingent on whether the Mountain Valley Pipeline gets its Southgate Extension – that a replacement gas plant should operate.
The extension of the Mountain Valley pipeline has been a controversial issue in the state: the North Carolina Department for Environmental Quality rejected the extension for the second time in April, after it was reported to them. remanded by a federal court of appeal. Two other coal-fired plants, the Cliffside and Mayo plants, would retire in 2028 and 2029, respectively, under the law. The 2,240 MW Belews Creek plant, in operation since 1974, and renovated to allow natural gas co-combustion in 2020, would remain without a withdrawal date under the bill.
Some players in the solar industry were happy with the bill, which expands the law on public procurement of renewable energy, requiring state electricity providers to procure an additional 777 MW of renewable energy per year. in a bidding process through 2026. It also follows the South Carolina Net Metering Model, preserving 1-to-1 credits while accounting for variability in solar tariffs, and allows small power producers to extend their power purchase contracts for a decade and reduce their current contractual tariff.
the The Carolinas Clean Energy Business Association, which was part of the negotiations, said in a statement that it “Is encouraged by the proposed expansion of the CPRE program in H 951, as well as the accelerated phasing out of unprofitable coal-fired plants and an increased opportunity for customers to participate in renewable energy programs.” We look forward to continuing to work with lawmakers, stakeholders, and the Cooper administration to ensure that the final bill provides North Carolinians with all the benefits of a competitive supply of renewable energy at low cost. “
But despite accelerated coal withdrawals and improving solar policies, Democrats are not convinced by the bill.
The legislation “would lubricate the shoes for gas”
Democratic lawmakers have already started meeting with Republican leaders to voice concerns about the bill, including that it will replace a large amount of coal capacity with gas. Duke argues that the transition to cleaner energy will require some gas power.
“It’s important to leverage an ‘all of the above’ strategy by investing in storage, renewables, cleaner burning natural gas and carbon-free nuclear. Gas installations are included in our plan to help us ensure customer reliability and meet carbon reduction targets faster. and compliment the growth of renewables on our system that is not available 24/7, ”said Rountree.
The support of at least some Democrats will be crucial in getting the bill signed by the governor and getting it through the House to begin with, given that some Republicans are likely to oppose the solar provisions, the representative said. Graig Meyer, D.
The bill’s four Republican sponsors and Governor Cooper’s office did not respond to requests for comment.
A sticking point for Democrats will likely be the switch from coal to gas, Meyer said.
“We don’t believe in replacing a failed asset with another failed asset,” he said.
Representative Pricey Harrison, D, is also concerned about the potential costs of stranded assets associated with adding new gas plants, pointing to a January report that Duke’s long-term resource plans could result in costs of stranded assets of $ 4.8 billion until 2074. And conservationists note that this bill would “essentially grease the pallets for gas,” putting into effect plans to build factories rather than channel them through the appropriate regulatory channels.
It’s unclear where Democrats and Republicans will find common ground, Harrison and Meyer said. Both lawmakers are opposed to building new fossil-fueled power plants, and Meyer said he would potentially compromise on coal-fired power plant retirement dates in order to find more sustainable replacement capacity. One aspect of the bill that could be controversial, according to Meyer, but which could provide a zero-emission route away from coal, would see Duke incur costs of up to $ 50 million to obtain a permit from federal regulators in order to locate an advanced site. nuclear reactor in North Carolina.
Thompson argues that the coal-gas dilemma could be solved in part by securing replacement capacity through competitive all-source supply, in order to ensure the least costly alternative resource portfolio for decommissioning. capacity of coal-fired power plants.
But this bill would reduce regulatory oversight over the long-term integrated resource planning process, giving the green light to gas plants through the legislature, she said. And, point out Thompson, Meyer and Harrison, the multi-year tariff provision further reduces regulatory oversight.
Multi-year pricing plan
Duke has been pushing for a multi-year tariff plan for years, and his latest attempt to implement such a policy failed in the 2019 legislative session following controversy on both sides of the aisle. The current iteration is an improvement on the previous proposal, Meyer and Harrison said, but there are still concerns that it may erode regulatory oversight.
The most significant improvements according to Harrison are the inclusion of performance-based pricing in the multi-year pricing plan. The proposal would also decouple or separate the amount of energy a utility sells from the profits it receives, giving Duke more incentive to invest in energy efficiency. Duke said “it is important to encourage investment in clean energy and the modern cost recovery mechanisms that this bill addresses.”
But the plan would also allow the utility to submit a rate plan that encompasses costs for the next three years, based on the service’s projected costs. The utility argues this will cut down on costly regulatory processes, but Meyer and Thompson say it could save the utility too much money, given that it eliminates annual oversight from the pricing process.
“The potential for over-profit is the real issue,” Thompson said. “We welcome provisions that would take coal out, while at the same time removing the regulatory capacity of the utility board” is a problem.
Finally, Thompson pointed out that the bill does not include a study to examine the potential benefits of competitive supplies from all sources, an imbalanced energy market, or even a regional transportation agency (RTO). The stakeholder process that met last fall before negotiations on the bill began agreed it would be a good thing for the state to consider, she said, and a similar study is underway in South Carolina. But Duke opposes such a bill and there has been a campaign in the state against considering the RTO expansion.
“It makes you wonder, what are they afraid of? Thompson said. “Will the study show that this is a good option? If not, what do they have to fear from a study?